Preparing for a sale

If you are selling your house you will probably set about tidying it up before you invite buyers around to view it. You may give some rooms a coat of paint, take all the clutter out, finish those odd DIY jobs and tidy the garden. You will not be short of advice. It seems every week that a new house makeover programme arrives on the television.

Selling a business is a similar undertaking. You are strongly advised to seek the advice of an experienced professional who will help you to get ready for the sale. It could make a big financial difference to the sale price.

Accounts

An interested buyer will want to examine copies of your annual accounts, usually the last 3 years. Of these the most recent year is the most interesting. Ideally this run of accounts should show a steady growth pattern in both sales and profits with expenditure and cash flow being properly controlled.

Purchasers do not want to see a roller coaster ride. There will be ups and downs from year to year; perfectly acceptable as long as you have an explanation.

The valuation of the bidder will be largely driven by the level of profits. All other things being equal and within accountancy rules, you need to present these as high as possible in the final accounts. You may also want to look at the cash level in the business.

 

Find your Skeletons

Find your skeletons and deal with them either before you begin the sales process or in the very early stages.

Bidders for your company do not like surprises. If they find one, you can be sure that they will set about looking for others.

• Do you have outstanding disputes with customers or suppliers?
• Do you have any potential bad debts in the accounts?
• Are there director loans?
• Do your management accounts add up?
• Perhaps there is an unexplained stock loss to tidy up.
• Are you in arrears with tax?
• Are your property and equipment leases in good order?

Legal Issues

Are there any contracts which will come up for renewal during the selling process? Better to get them resolved now. Similarly, any ongoing legal disputes need to be resolved before the sale begins.

Your trade marks, patents and licences need checking that they are up to date and also you should check that there are no outstanding matters with regard to environmental issues.

Is your Health, Safety and Training record presentable and are you up to date with regulatory inspection and accreditation standards?

Are there any ongoing employee disputes which can be cleared up and are your pension fund matters in order?

Aitken Corporate Finance will help you with all of this before the sale in order to prepare your company to achieve the maximum sales price.